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Restraining use in Court of inadvertently disclosed privileged material

Posted on 16 February 2023

In the case of Flowcrete UK Limited & Ors v Vebro Polymers UK Limited & Ors [2023] EWHC 22 (Comm) the London Circuit Commercial Court refused an application for injunctive relief to prevent the use of  privileged material that had been inadvertently disclosed. This case is an important reminder of the dangers of inadvertent disclosure of privileged material, and the tests the court will apply when considering whether to prevent the use of such materials once disclosed.

The facts

In June 2022 the parties exchanged their extended disclosure. The Defendants' extended disclosure included two PDF documents, which were compilations of other documents. These documents appeared to show evidence of wrongdoing on the part of the Defendants that was relevant to the Claimants' claim.

Two months later, following several letters from the Claimants' solicitors, in August 2022 the Defendants sought to assert legal advice and litigation privilege in respect of these documents. The Defendants asked the Claimants to delete the documents, and to redact any reference to them in any inter partes correspondence placed before the Court.

The Claimants refused to do so on the grounds that: it did not appear that the documents had been disclosed by mistake; it was not obvious that they were privileged; and, in any case, any privilege in them had been waived. The Defendants therefore issued an application seeking injunctive relief to restrain the Claimants from relying on the documents and compel them to destroy them.

The decision

Notwithstanding their position that this was not the case, the Claimants agreed that the hearing should proceed on the basis that the documents were in fact privileged. The dispute between the parties was therefore as to how the Court should approach the inadvertent disclosure of privileged documents which potentially revealed wrongdoing by the defendants.

The court held that two situations should be distinguished:

  1. When an allegedly privileged document contains evidence of iniquity; and
  2. When, as a result of a potential wrongdoing being revealed, it would be wrong to restrain use of inadvertently disclosed material by injunction.

In the first case, legal professional privilege (whether legal advice or litigation privilege) does not exist at all. There can be no privilege in respect of documents which are themselves part of criminal or fraudulent proceedings, or in communications made in order to get advice for the purpose of carrying out fraud. However, this was not the position here.

In relation to the second case, the Court held that where a receiving party has read the disclosed documents without being told that the documents are, or are alleged to be, privileged and have been inadvertently disclosed then the principles set out in Al Fayed v Commissioner of the Police of the Metropolis [2002] EWCA Civ 780 applied.  

In that case the Court of Appeal held, in summary, that the general position will be that the receiving party will be entitled to assume that any privilege that may have attached to the documents has been waived. As such, it will usually be too late to assert privilege for the purposes of injunctive relief. However, the Court may grant such relief where it considers that it would be just to do so. In the absence of fraud, this may be appropriate where the disclosure is the result of an "obvious mistake".

The Claimants further relied on the test for when injunctive relief may be granted where the inadvertently disclosed document(s) reveal wrongdoing on the part of the disclosing party, as outlined in Pickett v Balkind [2022] EWHC 2226 (TCC). In that case the High Court held that the test was whether it would be "unconscionable" for the recipient to rely on the document. If it would not be unconscionable then it would not be appropriate to grant an injunction. The Court therefore held that, contrary to the Defendants' position, the decision in Pickett was consistent with the principles laid down in Al Fayed, and should be followed in this case.

Applying these tests, the Judge refused the Defendants' application on the basis that: (i) he did not regard the inadvertent disclosure as having been an obvious mistake; and (ii) he considered it would be unjust and inequitable to grant the relief sought.

Key takeaway

The obvious lesson is as follows: be very wary of inadvertently disclosing privileged material. Once such material is disclosed and provided to your opponent it will be very difficult to put the genie back in the bottle unless you act immediately.

However, the case is also a reminder that parties should not forget about the fraud exception, which prevents a party from claiming privilege at all in relation to a document that would otherwise have been privileged. The fraud exception is not limited to legal advice privilege, but also applies to litigation privilege. Parties should keep in mind that they cannot seek to use privilege as a shield to hide fraudulent or criminal wrongdoing.

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